Taxes

W-4 Update

 

2018 W-4 ChangesIRS has released a bulletin stating that they have completed the 2018 withholding tables based on the new tax law and that all employers must start using them no later than February 15, 2018. However they have not completed the new W-4’s or the calculator that can be used in order to determine how much you should have withheld. So in the next month you should see your federal withholding decrease resulting in you having a higher paycheck.

 
So what does this mean for you at this time? You currently do not have to do anything. When you come into the office for your appointment we will look at your situation for next year’s
taxes. If we feel the need, we will recheck your withholdings halfway through the year to make sure that you are comfortable with the amount you will owe or the amount that you have as a
refund.

 
Susan

 

2018 Tax Law Changes

 

2018 tax lawThere are many new changes to the tax law starting on January 1. 

 
Please download this 2018 Tax Letter for all the details.

 

Ten Year-End Tax Tips for 2017

 
Ten Year-End Tax Tips for 2017Here are 10 things to consider as you weigh potential tax moves between now and the end of the year.

 

1. Set aside time to plan

Effective planning requires that you have a good understanding of your current tax situation, as well as a reasonable estimate of how your circumstances might change next year. There’s a real opportunity for tax savings if you’ll be paying taxes at a lower rate in one year than in the other. However, the window for most tax-saving moves closes on December 31, so don’t procrastinate.

 

2. Defer income to next year

Consider opportunities to defer income to 2018, particularly if you think you may be in a lower tax bracket then. For example, you may be able to defer a year-end bonus or delay the collection of business debts, rents, and payments for services. Doing so may enable you to postpone payment of tax on the income until next year.
Continue reading

Pretax, Roth, or After-Tax Contributions: Which Should You Choose?

 
Pretax, Roth, or After-Tax Contributions: Which Should You Choose?If your employer-sponsored retirement savings plan allows pretax, after-tax, and/or Roth contributions, which should you choose?
 

Pretax: Tax benefits now

 
With pretax contributions, the money is deducted from your paycheck before taxes, which helps reduce your taxable income and the amount of taxes you pay now. Consider the following example, which is hypothetical and has been simplified for illustrative purposes.
 

Example(s): Mark earns $2,000 every two weeks before taxes. If he contributes nothing to his retirement plan on a pretax basis, the amount of his pay that will be subject to income taxes would be the full $2,000. If he was in the 25% federal tax bracket, he would pay $500 in federal income taxes, reducing his take-home pay to $1,500. On the other hand, if he contributes 10% of his income to the plan on a pretax basis–or $200–he would reduce the amount of his taxable pay to $1,800. That would reduce the amount of taxes due to $450. After accounting for both federal taxes and his plan contribution, Mark’s take-home pay would be $1,350. The bottom line? Mark would be able to invest $200 toward his future but reduce his take-home pay by just $150. That’s the benefit of pretax contributions.

 
In addition, any earnings made on pretax contributions grow on a tax-deferred basis. That means you don’t have to pay taxes on any gains each year, as you would in a taxable investment account. However, those tax benefits won’t go on forever. Any money withdrawn from a tax-deferred account is subject to ordinary income taxes, and if the withdrawal takes place prior to age 59½ (or in some cases, 55 or 50, depending on your plan’s rules), you may be subject to an additional 10% penalty on the total amount of the distribution.
 
Continue reading

Top Financial Concerns of Baby Boomers, Generation Xers, and Millennials

 
Top Financial Concerns of Baby Boomers, Generation Xers, and MillennialsMany differences exist among baby boomers, Generation Xers, and millennials. But one thing that brings all three generations together is a concern about their financial situations.
 
According to an April 2016 employee financial wellness survey, 38% of boomers, 46% of Gen Xers, and 51% of millennials said that financial matters are the top cause of stress in their lives. In fact, baby boomers (50%), Gen Xers (56%), and millennials (60%) share the same top financial concern about not having enough emergency savings for unexpected expenses. Following are additional financial concerns for each group and some tips on how to address them.
 

Baby boomers

 
Baby boomers cite retirement as a top concern, with 45% of the group saying they worry about not being able to retire when they want to. Although 79% of the baby boomers said they are currently saving for retirement, 52% of the same group believe they will have to delay retirement. Health issues (30%) and health-care costs (38%) are some of the biggest retirement concerns cited by baby boomers. As a result, many baby boomers (23%) are delaying retirement in order to retain their current health-care benefits.
 
Other reasons reported by baby boomers for delaying retirement include not having enough money saved to retire (48%), not wanting to retire (27%), and having too much debt (23%).
 
Continue reading

BrokerCheck

Newsletter Subscription

  • This field is for validation purposes and should be left unchanged.